6 SEEDS OF GOLD April 5, 2014 SATURDAY NATION enterprise GENESIS OF TROUBLE» FARMERS HAD BORROWED AGAINST THEIR PRODUCE, MEANING ANY MONEY THEY GOT WAS FIRST DEDUCTED We lost all in warehousing, b Linda and Gerald Aluoch left their jobs and invested Sh1 million life savings into a warehouse agribusiness, but they lost the money and all the efforts they put in. They are now picking up the pieces as they try to evaluate what went wrong BY KINGWA KAMENCU Gerald Aluoch’s cheerful mien could have you mistake them for any other couple running to meet friends or to check out new outfits at a fashion store. The truth is that the cocktail L of disappointment they have downed in the past two years cannot be washed away by any highs urban life could provide. They left top city jobs against the advice of friends and relatives to set up a warehouse for farmers in Makueni. Then, they were hopeful, but their two-year venture saw them go through harrowing business experiences. Their ability to laugh at their journey of highs and lows is refreshing and though still in recovery mode, they look back on their endeavour without regret. “We fell into a valley but we are now trying to get up. We are somewhere on the hill going up the mountain, and soon we believe that we shall be back up there; our star will shine,” says Aluoch, the soft-spoken of the two. The dark-skinned 38-yearold has a penchant for poetic imagery. Linda walks with resolute strides as though she has no uncertainties of where she is going. It was her who took the plunge first by quitting her marketing job in Nairobi in 2011 before Gerald left his banking job to join her a year-and-a-half later in February 2012. Married for seven years, with two children, it was serendipity that led them to warehousing. “After trying to trade in grains and having problems with quality and quantity, we were referred to an organisation that was looking for a warehouse operator.” Their warehouse is based in Makueni, 8km off Mombasa Road and it specialises in grains such as green grams, cowpeas, pigeon peas, sorghum, blackeyed-peas and beans. “Since time immemorial, Ukambani has kept making headlines about people eating dogs, starving and being in need of relief food, yet parts of it are so green. I asked myself, ‘why do we have these perennial problems of food shortage and starvation in a place that is so productive?’ It made us want to interact with farmers to find kkamencu@ke.nationmedia.com inda Kithuku-Aluoch and out what goes wrong,” recounts Linda. The couple’s eventual find- ings pointed to marketing inefficiencies where middlemen ruthlessly exploited farmers. “There are places where they were offered sufurias instead of money. They had no other options because their grains would rot,” Gerald says. Setting up a warehouse thus appeared the perfect solution. It appealed to the Aluochs’ altruistic nature and they hoped it would provide them steady income. Having both left their jobs to reside in Athi River, closer to the business, their initial capital of Sh1 million went towards renovating the warehouse (it had previously been a warehouse used by cotton farmers), lease costs, fumigation and insurance. More money would go into overheads of security, power and salaries for their staff of six. An eye on the export market meant a lot of care and expense was put into making the premises top-class if they were to get approval from international standardisation firms. The source of their financial woes came from two fronts. First, the warehouse initially received too little produce, holding only 100 tonnes of grain, against its potential of 1,500-tonne capacity. “What this meant was that our quantity was too little to go to the market. With the export mar- SOMETIMES WE WOULD ASK OURSELVES, ‘ARE WE HERE TO DO CHARITY OR TO MAKE MONEY?” Ms Linda Kithuku-Aluoch and Mr Gerald Aluoch ket, you can’t start selling them a tonne or two,” Linda explains. The second problem arose from the fact that farmers they were introduced to had already borrowed against their produce, meaning that any money that came in was first deducted by banks, many times leaving nothing for warehouse storage charges, which was where the couple’s revenues would come in from. This truth hit them hard three months down the line, after they had completed renovations and signed contracts with farmers. Holding onto hope and optimism, their finances and idealism, however, began to wither seven months later. “We had faith in the concept and knew it was something that could work. We had planned and known that working in cycles, the returns would be enough to keep it going. But the banks were determined to recover all loans the farmers had taken, even on produce that was still in the warehouse. We had projected to earn slightly over Sh1 million in the first season, but the farmers predicament ensured that even if we were earning money, there ABOVE: Linda Kithuku-Aluoch (holding microphone) with farmers during the opening of their warehouse in Makueni in 2012 . TOP RIGHT: The closed warehouse and ABOVE RIGHT: Linda and Gerald Aluoch. JOHN KISU, ANTHONY OMUYA AND COURTESY I NATION was no cash flow,” says Linda. This aside, they found them- selves forced to play an unexpected role: that of a benefactor. Farmers came to them with various requests that included asking them to purchase items like shoes for their children and pay school fees. “One farmer came to the warehouse crying, asking for school fees. Her grandchildren had been orphaned and she had no other means of making money. Sometimes we would ask ourselves, ‘are we here to do charity or to make money?’ But we took the position that our farmer is our customer and whatever affects them, affects us,” explains Aluoch. Their money was drained and they were soon out of reserves. “It was bad. It reached a point when we had to depend on relatives to meet our needs. We lived off donations from friends. It was a very low moment,” Linda remembers. LESSONS PICKING UP THE PIECES They are also looking at ways to utilise the idle space in their warehouse and hope to eventually set up similar storage facilities in neighbouring counties Time has seen them shift strategy and rather than focus on warehousing alone as earlier planned, they now want to be involved in trade and value addition “We are doing research to look at how else grains can be used apart from food. This is for commodities that do not have good uptake in the market,” says Linda KithukuAluoch. “There are some lessons that one can only learn when you dive into the ocean.”